In this Oct. 21, 2014 file photo, people pass an AT&T store in New York's Times Square. AT&T will combine its media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV. The deal announced Monday, May 17, 2021, would create a separate media company as households increasingly abandon cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube. (AP Photo/Richard Drew, File)
NEW YORK (AP) — AT&T will combine its massive media operations that include CNN, HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.
It is a major directional shift for AT&T which squared off with the Justice Department less than three years ago in an antitrust fight when it wanted to acquire Time Warner Inc. That was a fight that AT&T won.
However, a multitude of streaming services continue to encroach on traditional broadcast media companies which have sought strength through mergers. They are also pursuing new avenues into streaming entertainment.
AT&T operates HBO Max and Discovery created its own streaming service.
In the all-stock deal, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt. AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company.
The new company will be in direct competition with streaming services assembling a growing arsenal of original media content. Those include Netflix, Amazon, Apple, Disney and Comcast. Discovery launched a standalone streaming service called discovery+ this year.
The new media company will be able to invest more in original streaming content to compete, the companies said. It will house almost 200,000 hours of programming and bring together more than 100 brands under one global portfolio, including: DC Comics, Cartoon Network, Eurosport, Magnolia, TLC and Animal Planet.
Discovery President and CEO David Zaslav will lead the new company. The new company’s board will have 13 members, seven will initially appointed by AT&T, including the chairperson. Discovery will initially appoint six directors, including Zaslav.
The deal is expected to close by the middle of next year. It still needs approval from Discovery shareholders. AT&T stockholders don't need to vote on the transaction.
AP Business writers Anne D'Ínnocenzio and Michelle Chapman contributed to this report.
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Like any group of stocks related to travel and tourism, hotel stocks saw a steep drop in share prices in 2020. The leisure and hospitality sector that once had 15 million employees has lost 4 million jobs since February.
Many major cities will be feeling the ripple effects of the Covid-19 pandemic for years. However, there is ample evidence that shows the pandemic may be coming to an end. The number of new cases is dropping. The number of those getting vaccinated is rising. And even in the cities with the most restrictive mitigation measures, the slow process of reopening is beginning.
All of this can’t come fast enough for individuals who rely on the travel and tourism industry for their livelihood. Hotel chains had at least some revenue coming in the door. And when earnings season concludes, the more budget-friendly hotel chains may realize revenue that is 75% of its 2019 numbers. But that is not enough to bring the hotels to anywhere near full employment. Particularly with hotels that have bars and restaurants that have remained closed or open at limited capacity.
Many economists are optimistic that travel may begin to look more normal by the summer of this year. And the global economy may deliver 6.4% GDP growth this year. With that in mind, the hotel chains with the best fundamentals and the broadest footprint will be in the best position as the economy reopens.
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